Tuesday, April 19, 2011

United We Stand...

With all the emotion and negativism that’s rampant throughout the land I thought I’d take a moment and step back to look at the big picture.

The conservative right is all about eliminating government in our lives and allowing more self-determination. They perceive the government as intruding on their freedoms and I can see their point.

The liberal left, on the other hand, is afraid that the government is the only protection their constituency has and, therefore, they want the cop to stay around and protect them from the ruling class. And I can see their point.

Meanwhile, the changes that each side is recommending are about as likely to ever pass that the rest of us can sit back and wait for some watered down, over-compromised solution that will not make anyone totally happy. And, whatever solution they ever do come up with, will take so long that the problems we are experiencing today will no longer be current events.

So, stepping back, I asked: “Why do we need our government at all?” I came up with two reasons.

1) To maintain standardization
2) To do things that the private sector will not do on its own

We don’t think much about standardization. The fact that wherever you buy a light bulb in the United States you can be sure it fits any light socket. Or that screws tighten clockwise or gasoline works in all cars or railroad tracks are all the same gauge. We appreciate these things but don’t think about them as a major function of government. One of the major strengths of our “united” system has been that we, as a nation, conduct commerce seamlessly. In fact, thanks to the Uniform Commercial Code, certain fundamental laws are common to all states which expedites our ability to count on each other to be fair. Our federal system of justice makes it possible for every citizen to feel somewhat protected. The European Union was formed 200 years after our founders launched our experiment because Europe and Asia have been suffering from non-standard currencies and laws and manufacturing specifications forever. Bringing standardization to all the member nations has allowed the EU to play a role in world commerce that would otherwise be unavailable. Countries are begging to become members. Standardization is what has made the US of A the most powerful economy in the world.

Secondly, we hear continuing reference to the capitalist system and its profit-driven, free market vision. In the interest of full disclosure, I have to admit that I strongly believe in capitalism. But, capitalism has a couple of flaws one of which is that, if the private sector is totally profit oriented, it won’t take care of things that need to be done but aren’t profitable. If we slow down the frenzy momentarily, we can imagine what some of those things are. Actually, if we look at Russia or China with their new found capitalism we have a model. Moscow and Beijing are two of the most polluted cities in the world. Their rivers and atmospheres threaten human life in the same way our smokestack industries and sweatshops did before the government stepped in to regulate. If profitability were my only motive, why would I be inclined to provide a safe workplace or clean effluent or scrubbed smokestacks. If you honestly take a look at what happens when profit motivation is allowed to exist in the absence of any rules it’s a nightmare.
Additionally, what about things that just don’t inherently make money? Airports, highways, park land, rural services, schools and indigent citizens come to mind. And let’s not forget the court system and the tax system and homeland security?

It seems like a great idea to eliminate taxes and to get the government out of our lives but, the real answer is found in understanding what we really need government for before we get on our soap box. Frankly, if the private sector would recognize long-term profitability as being as important as short-term profitability, many of the things the government intervenes in would be eliminated. That’s another flaw in the capitalist system: it attracts people who want to make a quick buck or respond to an hourly change in their stock price, rather than the responsible private sector that laissez-faire economics assumes.

Personally, I blame the private sector for inviting the government into their businesses. If they would do the responsible thing for the UNITED States of America and not just for their shareholders, profitability would be an ongoing, natural product of long-term planning. Unfortunately in a totally free enterprise system a company can (and will) build an unsafe mine or dump toxic waste or manufacture a plug that won’t plug into your socket.

United we stand, divided we fall.

Friday, April 1, 2011

I am Proud to be an American This Week!

I am proud to be an American this week.

I’m so surprised to say that. The last time I remember being really proud to be an American was during Ronald Reagan’s administration. I remember how he rose above the politics in Washington and did what he thought was the right things to do. I think that’s called “leadership”.

I’m proud because we intervened in Libya. I’m proud because we intervened in a situation where an out of control despot was murdering his own people in order to preserve his personal money machine. I’m proud because, for once, we did it the right way.

Forget the budget and the politics and the “what’s in it for us” attitude. I was always taught that ethics only count when they cost you something. If you want credit for doing the right thing, do it when there’s nothing in it for you except the knowledge that you behaved as a human being amongst other human beings. That you acted out of pure civility. We don’t do much of that anymore.

There are two types of error: errors of commission and errors of omission. The former means that you did something wrong. The latter means that you did nothing. I think an error of omission is by far the more egregious.

When my daughter’s twins were born in November I took a course in infant CPR. One of the questions for the instructor was “How do you know if someone actually needs CPR? How do you decide?” Her response was that the worst thing you can do is nothing.

We did nothing in Serbia and the Sudan and Rwanda. Is genocide our business? Are we policeman for the world? You betcha.

And we finally did something about it. And that makes me proud to be an American.

Monday, March 7, 2011

Tuesday, March 1, 2011

Several Things Happened Recently

Several things happened recently that I hope someone can explain to me:

1) Republicans trounced Democrats in the November mid-term election.
2) Congress voted to extend the “Bush Tax Cuts” which keep taxes reduced for the wealthiest taxpayers.
3) Congress voted not to extend job retraining dollars for a program targeted at people who lost their jobs due to their jobs being moved outside of the United States.
4) The Wisconsin Legislature passed a bill eliminating collective bargaining for public workers.

We are in the midst of a mess. Those at the very top of the economic pyramid had it tough for awhile but are slowly getting back to business as usual. Incredible Wall Street bonuses are back. Even the Bernie Madoff money is being returned to its rightful owners.

Those at the very bottom of the pyramid are not much worse off than they were before. I’m not implying that they are doing well or that their lives in general are in any way what I would like to live, but they are always up against it, and they still are.

It’s the folks in the middle that puzzle me.

The financial disaster that continues to face the middle class is as bad, and in many ways worse, than the Great Depression. The middle class in 1929 was much smaller than it is in 2011. That means that the impact on the middle class in the Great Recession affects many more people than it did in the Depression. And, in my opinion, things get worse every day, and we are 2 years into this thing.

Meanwhile, with all these wage earners and conspicuous consumers scrambling to figure out how they will live for the rest of their lives without the good job they used to have, domestic manufacturers continue to move jobs offshore in the quest for cheap labor.

While all this is going on Congress votes to eliminate a job retraining program? And Wisconsin votes to eliminate public unions which is simply a foreshadowing of job cuts and pay cuts. And the conservative factions continue to have the support of the people who are getting screwed.

I don’t get it. Trickle down economics has long ago been proven not to work. The theory, that funneling money to the wealthiest individuals and companies will cause them to reinvest in America and create jobs, is patently untrue. Ronald Reagan, who BTW is one of my heroes, tried it and realized that it was a good theory and that’s all it was.

Bail out the banks, and all they do is invest overseas. Bail out the large corporations, and they build factories overseas. Bail out the rich, and they invest in the stock market (which creates zero jobs) that was just sold to Frankfurt.

The middle class is being eliminated. We are regressing to pre-World War II times where the Great American Dream did not include private home ownership and gracious retirement and a college education for everyone. Hope for the middle class no longer exists.

Can anyone explain to me how and why the middle class has been collectively deluded into thinking that conservative Republicans are on their side? How can anyone in the middle class be excited about the Tea Party? It bothers me when something is patently obvious to me but others can’t see it.

Actually, in Wonderland, Alice said everything right side up is upside down. And come to think of it, they had tea parties there too. Hmmm…I wonder.

Monday, November 15, 2010

I'm Having a Social Networking Crisis!

This whole thing has kind of crept up on me. It started out as a distant rumble and ultimately turned into a major seismic event. I ignored Twitter and Facebook and Plaxo (remember them?) as long as I could but, then, the overwhelming peer pressure to play the game made me get my head out of the sand.

I approached it very cautiously. I couldn’t understand why someone would feel compelled to tell everyone that he went to the grocery store or picked up the kids from a soccer game. And, what such trivia had to do with anything related to business. It was no longer possible to catch up with someone only once a year at an annual event (which satisfied me just fine). Now I was forced to be aware of what people I barely knew were doing all year long. Too much information.

But, who am I to buck the trend? I joined Facebook and LinkedIn and Twitter and Tumblr and immediately began to build my network. This is where my crisis began.

Each of them has a similar way of “friending” someone. They give you a choice between “colleague” and “friend” (except Facebook which uses more of a social model, hence everyone is considered a “friend”) and there’s the dilemma.

When I ask someone to join my network I have to decide how to classify him. I’m always afraid that I will insult someone by picking the wrong option. What if, for example, I want to invite a close business acquaintance? Do I pick colleague or friend? If I’ve known him for years I think of him as a friend but I’ve never seen him socially so I guess he’s a colleague. But, what will he think if I call him a colleague and he thinks of me as a friend? It’s happened to me on the receiving end, where someone called me a colleague and I was slightly taken aback because I thought we were closer than that.

I’ve actually had someone accept my invitation and change the classification from colleague to friend (which I considered a promotion). I dread the day when someone changes me from friend to colleague. The demotion would be devastating.

I’ve decided we need a better classification system. More friending options than we currently have. Here are some suggestions:

BUSINESS FRIEND (NON-BUSINESS) – Some of my best friends over the years have been through business. I value them as much as I do my social friends and they’d be insulted if I fail to acknowledge them when I make this important decision. But don’t take advantage of my decision and start trying to sell me something.

BUSINESS FRIEND (BUSINESS) – Okay if you try to sell me something occasionally. This classification can easily drop to COLLEAGUE I DO BUSINESS WITH if I get a sales call more than once a year.

BUSINESS FRIEND (WITH BENEFITS) – Someone I know through business who has tickets to things or a boat.

BUSINESS FRIEND (PROBATIONARY) – Someone who was previously a colleague but is moving up to business friend because he sent me a referral. If I get another he’ll shed the probationary label. Also used if he’s buying a boat or condo at the lake.
COLLEAGUE – Someone I met once at Business After Hours. I don’t remember what he looks like but I have his business card.

COLLEAGUE EVERYONE WANTS – Someone who I don’t know very well but who looks impressive to others.

COLLEAGUE WHO CALLS ME WHEN HE NEEDS SOMETHING – Someone who’s my best buddy when he wants me to raise bail money to get out of some silly jail fund raiser.

COLLEAGUE I WANT TO LINK TO JUST TO PACK MY NETWORK – Someone I invite to join me because it’s embarrassing to have too few people on my contact list.

COLLEAGUE I DON’T CARE FOR – This is a great way to know where people you don’t like are going to be so you can avoid them.

I think that our culture would benefit from much better understanding between social networking buddies. It creates honesty where today we have deceit.

Ashton Kutcher eat your heart out.

Tuesday, November 2, 2010

Definition of "Small"?

The cover story in this month’s Forbes magazine showcases “America’s Best Small Companies in 2010” in the United States. I find it very encouraging that one of the major business magazines has generously decided to give so much space to the little guy.

After all, 75% of the businesses in the United States employ fewer than 10 people. That means that the overwhelming number of businesses in the US (around 4.5 million companies) finally gets a hearing. Any politician will tell you that they form the backbone of American business. The Ewing Marion Kauffman Foundation said, in a 2009 report (“Where Will the Jobs Come From” November 2009), that “…firms between the ages of one and five create the most net new jobs, dwarfing the other age classes. These firms also create the highest average number of jobs: roughly four jobs per year.

They concluded that “Still, virtually all of the attention among policymakers and the media has focused on the waiting game by larger firms, currently reluctant to take back employees they dismissed, and unwilling so far to begin hiring new employees again. The analysis here, however, suggests this attention is misplaced. The overwhelming source of new jobs is new firms. The key implication for policymakers concerned about restarting America’s job engine, therefore, is to begin paying more attention to removing roadblocks to entrepreneurs who will lead us out of our current (well-founded) pessimism about jobs and sustain economic expansion over the longer run. This much-needed shift in focus cannot come soon enough.”

So, thank you Forbes for exposing this problem so prominently.

What’s that you say? What were Forbes’ criteria for identifying these small companies?

Let me look…hmmm. Hey wait a minute. Could it be?

They looked for companies that were publicly traded for at least 2 years, had a stock price over $5, and had gross revenues less than $1 billion. There must be some disconnect here. I thought we were talking about SMALL companies.

Are we all on the same planet? Apparently not. The policymakers and the media, to which the Kauffmann report referred, love to play the “small business” card at their convenience. They rely on the fact that what the public defines as “small” is never compared to what they define as “small”. By bringing small companies into the conversation, they kill two birds with one stone: they mislead the public into thinking they’re talking about Main Street and, they tout programs that do nothing for the real small businesses but take credit for thinking of the “little” guy.

In fact, the Small Business Administration’s definition of small is 500 employees or less and covers about 1.483 million out of 6 million employers or 25%. That leaves the balance of employees with over 500 employees:

1-9 employees 4.500 million
10-499 1.483
500+ .017

Yes folks, 17,000 companies in this country employ greater than 500 employees. So, when a magazine like Forbes wants to sell magazines, their target market is only interested in 1.5 million employers…the ones who do not create permanent jobs.
Here’s a comment the Forbes article received from a reader:

“If they were to write an article on small businesses with 20 or less employees, how many of those companies would be publicly traded? As an investor, why would I care about companies that are not publicly traded? Now, if they wrote an article about small companies (regardless of headcount) that would be going through an IPO, then I would definitely be interested in reading that article.” (Posted by jimgzz | 10/28/10 03:13 PM EDT)

Just like most of our brilliant financial gurus, this guy simply doesn’t get it. With most of the companies that provide jobs being totally ignored (if not ridiculed) he actually thinks that everything will just go along it’s merry way, just like old times. It’s shortsighted attitudes like his that started this mess in the first place.

But, encouragingly, here’s another comment:

“Forbes obviously has a completely different definition of a "small" company. According to the US Census Bureau, Two-thirds of all US businesses have less than 10 employees.

In fact each of the "Small" businesses featured fit in the top 0.5% of US businesses. How does this even closely reflect the real US economy? How about an article about the top 20 best US "true" small businesses under 20 employees. Then we will finally have an article that reflects and inspires the real US Small Business market.” (Posted by jbmetrics | 10/27/10 05:11 AM EDT)

Thank you “jbmetrics” whoever you are.

Thursday, October 7, 2010

It's the Job Market, Stupid!


Profitability is not in the best interests of your shareholders! Jobs are!

Heresy, you say? Let’s look at the facts.

The world economy is in a shambles, the likes of which we have never seen before. Sure, we had the Depression in the 1930s, but this calamity is worse. The world is exponentially more complex than it was 70 years ago. Economies are so intertwined with one another that it is sometimes impossible to sort them out. But, there’s one issue that rises above all the confusion … the need for jobs.

We need jobs, and we need tens of thousands of them, and we need them now. There are only two entities in this country that are large enough, wealthy enough and with broad enough reach to create that many jobs quickly: the federal government and large corporations.

After having gone through TARP and mini-TARP, the Feds are so deep in the hole that we’re up in arms about the almost unbelievable deficit. At the same time, people are screaming for lower taxes and more responsible federal spending. It is quite clear that expecting any major programs from the Feds, without printing more money, is ridiculous.

So, that leaves the other player … Fortune’s 500. The standard CEO answer to something he doesn’t want to do is “it’s not in the best interests of our shareholders.” Substitute “depositors” for shareholders, and you can include the banks. The statement implies some sort of carefully managed fiduciary responsibility by corporate management, when, in fact, it’s really how they keep their jobs and earn their bonuses. It conjures up images of focus groups with shareholders to determine what decisions would be in their “best interests.” And I just arrived from Mars.

The only shareholders that really matter in the stock market are the institutional investors. If CEOs think they’re making the correct strategic decisions, consider this: Our largest corporations (and banks) are accumulating obscene amounts of cash. Hundreds of billions. In order to maintain profitability, these companies have slashed operating overhead (i.e. jobs). Banks are borrowing from the Fed for practically nothing and earning interest with that money in overseas markets. Corporations have pulled back to such an extent that many of them spend as much effort managing their finances as they do creating their product. Shades of Scrooge McDuck.

Our economic “pump” has stalled. It needs to be re-primed, and the only way to do that is with jobs. We need to get people back to work so money begins to re-circulate in the economy. Corporations should reopen shuttered factories and open new branches just to get people working. And what will they manufacture and sell? I don’t care. Use your imagination, get clever, use some Yankee ingenuity. Until we get people spending again, our economy will remain in gridlock. Shareholders want long-term stability, not short-term noise. We need to take a step back so we can take two forward. It is in the enlightened self-interest of corporate America to step forward and take the leadership role we will not allow the government to play (and rightfully so).

Where are all those Harvard MBAs when you need them?